Impact of organizational culture on change management during mergers and acquisitions

Abstract

An increasing number of mergers and acquisitions across the world with several big-ticket acquisitions lined up (Comcast & 21st Century Fox) have necessitated the need to study the precursors for a successful merger. Despite favorable conditions, mergers frequently fail and often, contrasting company cultures are the culprit. In the following sections we first attempt to define organizational culture and the role it plays (internal integration and external adaptation). We identify different types of organizational cultures from literature reviews based on Cameron and Quin’s competing framework model and discuss in detail the how organizations can harness cultures to nurture an effective M&A. We finally develop a 4-step framework that organizations can adopt to ensure successful integration of the cultures. The steps are as below: • Identify the culture of the two companies • Map the cultural diagnosis of the two firms • Build a new culture • Drive the cultural change With the lens of the above framework, we analyze the Daimler Benz acquisition of Chrysler AG in 1998 in an endeavor to explain the subsequent failure of the acquisitions.